Macroeconomics of Financial Markets
In fact, two kinds of multiplier process are exhibited in ®gure 1, and it is useful to distinguish between them. One is a within-period, or static, multiplier. Consider the left-hand column of ®gure 1, marked ``datet'' (ignore any arrows to and from the future). The productivity shock reduces the net worth of the constrained ®rms, ................
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